How Not to Be Misled by the Jobs Report

May 1, 2014

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We obsess far too much on the Labor Department’s monthly jobs
report.

Think
about it this way: It’s the first Friday of the month, and the Labor Department
has bad news: The economy has added a mere 64,000 jobs last month, a steep
slowdown from 220,000 the month before. From Wall Street to Twitter, the
reaction is swift and negative.

The
price of oil falls, as do the prices of blue-chip stocks like General Electric.
The Federal Reserve faces calls to push interest rates lower. The lead
headlines in the next day’s papers talk of faltering job growth.

But
what if all the worries were based on nothing more than random statistical
noise? What if the apparent decline in job growth came from the inherent
volatility of surveys that rely on samples, like the survey that produces the
Labor Department’s monthly employment estimate?

Click here for the full
blog post by Neil Irwin in the New York Times.

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